Buying a vehicle at auction involves a few more considerations than purchasing a car from a dealer or private seller. When buying a car the old-fashioned way, you look up a few advertisements, do some research and then go to a car dealer or a private seller and haggle out the price. In the end, your efforts (hopefully) result in a good deal.
When buying a vehicle at auction there are potentially greater benefits when compared to a traditional purchase, given that vehicles can be purchased well below their normal market value. However, this is not something that should not be taken on without preparation.
With the following top tips, buyers can put themselves in the best position to have a successful vehicle auction experience.
Do Your Homework
When purchasing a car at auction, it is important to do your homework. There are two main areas to look into when buying a car at auction. The first involves checking the resale value of the vehicle through sites such as Kelly Blue Book and Edmunds.
These sites provide the current trade in, retail and market value of a vehicle based on the condition of the vehicle, features found in the vehicle and location. Valuation data can provide a baseline regarding how much you should pay and what type of value expect from the purchase.
Understanding vehicle history also can provide valuable information that may impact a vehicle’s value. Potential buyers can obtain an AutoCheck or Carfax report. These reports can reveal aspects of a vehicle’s history such as significant repair history, previous damage or the fact that a vehicle originated from an area that regularly salts its roads during the winter. All of these factors could potentially impact a vehicle’s value.
Have a Strategy
An auction is a competition. A more desirable vehicle will likely attract more bids. An important rule of thumb in this situation is to know your limits. The best auction strategy involves having a maximum price you are willing to pay for a vehicle and stick to it.
Also, unless you are looking for something very specific, you should spread your options out and target several vehicles at the auction. Therefore, if you lose the auction on your top choice, there are always other options. Spreading out your options also has the effect of reducing the emotion involved in bidding.
Don’t Let Emotion Get The Best Of You
Auctions are exciting. Auctions involve a great opportunity to get a bargain and give you the thrill of the chase. Human nature draws us to these situations and also makes us very excitable. Although it is difficult, try to fight the urge to get caught up in the thrill of the auction.
One can easily get carried away during bidding and in the end spending hundreds more than a car is worth. Don’t put all your eggs in one basket by focusing on one vehicle, spread your options out and keep a cool head.
Know your Mechanical Limits
Auction vehicles sometimes require a range of repairs to get them back up to standard. If you lack the ability or tools to deal with whatever work is required, or do not have a good mechanic to lean on, only bid on vehicles that require little or no work.
Know the Auction Rules
When competing in a sport, it is important to know the rules so that you may understand what you can and cannot do. Similarly, knowing the rules of an auction can place you in the best position for success. When you arrive at or register online for the auction, good practice dictates reading the terms and conditions of the auction. Terms and conditions can include fees or other rules regarding bids and payments.
Understand the Rules Regarding Salvage Vehicles
According to Carfax, “A salvage title is issued for a vehicle when an insurance company determines that the cost to repair it after a crash approaches (or is more than) the value of the vehicle. This can come from any number of issues, such as a crash, flood damage, fire, or even something minor like an accidental airbag deployment or minor fender bender.”
Knowing if a vehicle qualifies for this classification can have a substantial impact on its value (and whether you should bid or how much you should bid).
Also, it is important to note that the definition of “salvage” can vary by state. Therefore, it is important to understand what is considered a “salvage” vehicle in the state in which you will register the vehicle.
For example, California defines a salvaged vehicle as “one that has been either totally destroyed or damaged beyond what the insurance company is willing to pay to fix it, so the owner never gets the vehicle repaired. Depending on its condition, one of the several things may happen to the car.
New York’s definition is more precise: “A more familiar term might be “totaled”―a vehicle whose damage would cost more to repair than the car is worth. New York’s Department of Motor Vehicles must brand the title of a vehicle 8 years old or newer that the owner certifies was either destroyed or received damage worth 75% of its retail value―such as a car that was mangled in a crash.” Also, the conditions under which a salvage vehicle may be registered or sold at retail vary by state.
Further, when purchasing a vehicle with a salvaged title, it is important to note that most car insurance carriers will not fully insure a vehicle with a rebuilt title. You may be able to get PLPD insurance, but the insurance carrier may decline coverage, charge a higher rate or may limit certain types of coverage such as collision or comprehensive insurance.
With information and these top tips in hand, buyers can enter the process of buying a vehicle at auction with useful tools that can not only make the auction process more enjoyable, but also increase your odds of getting a good deal.